"It's possible for the BOJ to ease (policy) again later this year, when it becomes clear that there's not enough progress in reaching its price target"
- Norio Miyagawa, senior economist at Mizuho Securities Research & Consulting
Japan's consumer prices stopped declining in May, and labour demand rose to the highest level in five years. However, the Bank of Japan goal to achieve 2% inflation rate in two years seems unlikely achievable. The overall national inflation rate in the country came in at –0.3% in May, according to the Ministry of Internal Affairs and Communications, surpassing forecasts for –0.4% following the –0.7% reading in April. Core CPI, which excludes fresh food but include energy, was unchanged from a year earlier, in line with consensus, after coming in at –0.4% a month earlier. It was the first time in seven months that prices did not decline. Japan's core-core CPI, which strips out both food and energy, fell 0.4% following a 0.6% annual drop in April.
Meanwhile, the jobless rate remained unchanged, coming in at a seasonally adjusted 4.1% in May, while the availability of jobs improved to a five-year high. The number of new jobs offers increased 2.1% in May from a month earlier.
Overall, the Friday data added to signs of steady economic recovery, but it might take more time to achieve sustainable growth in prices even as the government's efforts are making some progress.
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